Met-Ed parent plans rate hike, announces earnings

By Joseph Deinlein,
August 5, 2014 at 9:33 AM

Customers of FirstEnergy Corp.'s Pennsylvania electric utilities could see their bills increase between 1 percent and nearly 18 percent, depending on the kind of customer and location, if the state Public Utility Commission approves a rate increase request by the company.

The company, based in Akron, Ohio, also reported second-quarter 2014 basic earnings of 15 cents per diluted share of common stock on earnings of $64 million and revenue of nearly $3.5 billion. In the second quarter of 2013, the company reported a loss of $164 million, or 39 cents per share, with revenue of more than $3.5 billion.

Rate increase

FirstEnergy said in a news release that its Pennsylvania utilities, which include midstate companies West Penn Power, Penelec and Met-Ed, had not sought a base rate increase in many years, despite the company investing more than $1.8 billion since 2006 for service-related enhancement projects for customers.

For West Penn Power, it would be the first in 20 years and for Met-Ed and Penelec, the first in eight years. The rate increase also includes Penn Power, which serves sections of Western Pennsylvania. That company has not sought a base-rate adjustment in 26 years.

“Over the years, with strict cost management and careful planning, we have enhanced service reliability for our customers while holding the line on electric rates,” Dave Karafa, president of Pennsylvania Operations for FirstEnergy, said in the news release. “Our proposed rate plans are needed in order to make critical customer enhancements, including infrastructure enhancements, by using technology to help reduce the number of outages and the duration and number of affected customers when an outage does occur. The plans are designed to bring our revenues in line with our costs, while minimizing the impact to our customers.”

FirstEnergy has asked the PUC to allow the rate increases go into effect on Oct. 3.

Here is a breakdown of the requests for each subsidiary and their impacts to different customer groups, according to FirstEnergy:

• West Penn Power has requested an increase of $115.5 million, or approximately 8.4 percent over current rates. West Penn serves portions of Adams, Franklin and Fulton counties.

% Increase

$ Increase

New Total Avg. Bill

Residental (avg. 1,000 KWH per month)

14.7

$13.62

$106.09

Commercial (avg. 40 KW/250 hours)

4

$30.26

$784.73

Industrial (avg. 20 MW/474 hours)

3.7

$13,618.41

$383,356.36

• Penelec has requested an increase of $119.8 million, or approximately 8.6 percent over current rates. Penelec serves parts of Cumberland, Franklin and Perry counties.

% Increase

$ Increase

New Total Avg. Bill

Residental (avg. 1,000 KWH per month)

16.3

$19.58

$140.04

Commercial (avg. 40 KW/250 hours)

7.3

$70.59

$1,043.98

Industrial (avg. 20 MW/474 hours)

0.9

$4,954.38

$579,674.81

• Met-Ed has requested an increase of $151.9 million, or approximately 11.5 percent over current rates. Met-Ed serves parts of York, Adams, Cumberland, Dauphin, Lancaster and Lebanon counties.

% Increase

$ Increase

New Total Avg. Bill

Residental (avg. 1,000 KWH per month)

17.8

$20.78

$137.34

Commercial (avg. 40 KW/250 hours)

7.2

$63.64

$950.04

Industrial (avg. 20 MW/474 hours)

2.1

$9,278.51

$454,140.75

Second-quarter earnings

FirstEnergy said its second-quarter 2014 basic operating earnings were 49 cents per share of common stock, which exclude the impact of certain special items. This compares to basic operating earnings of 59 cents per share of common stock in the second quarter of 2013.

To explain its lower basic operating earnings, the company pointed to lower commodity margin at the competitive business; higher operating expenses, principally in the regulated distribution segment; and higher expenses related to benefits, depreciation and interest, partially offset by higher transmission revenues, investment income, capitalized financing costs, a lower effective tax rate, and a benefit from the impact of an asset swap in West Virginia.

However, company president and CEO Anthony J. Alexander said the company was expecting these results.

“Through the second quarter, our regulated distribution and transmission businesses have produced solid results that are in line with our expectations,” he said in a news release. “Based on these results, and our expectations for the remainder of the year, we are re-affirming our full-year 2014 operating earnings guidance of $2.40 to $2.60 per share.”

FirstEnergy Corp. has 10 electric-distribution companies with customers in six states. The firm’s generation subsidiaries control capacity of more than 20,000 megawatts.